In a three-hour hearing of the House Oversight and Government Reform Committee, Bernanke denied threatening to oust Bank of America CEO Kenneth Lewis or the bank's board members if they abandoned the takeover after discovering spiraling losses at Merrill.

Bank of America completed its purchase of Merrill Lynch on Jan. 1.

"I never said that I would replace the board and management" if Lewis decided to invoke a clause in the acquisition contract to try to stop the deal, Bernanke told the committee.

It was Bernanke's first public response since the committee launched an investigation into whether he or other government officials bullied Bank of America to stick with its plan to combine the two financial powers.

Throughout the day, Bernanke faced often hostile questioning — unusual for a Fed chairman, who typically commands deference in public settings.

Of Bernanke's denial that he threatened Lewis' job, Rep. Jason Chaffetz, R-Utah, said: "With all due respect, I'm just not buying that."

Adopting the role of outsider, Republicans in particular have turned aggressive toward Bernanke, trying to link him to the Obama administration as advocates of government meddling in private industry.

It's an odd shift, as Bernanke is a Republican appointee, and many of his key advocates are Democrats. And it comes at a pivotal time: Bernanke's term expires early next year, and President Barack Obama will have to decide whether to pick his own Fed chief or reappoint Bernanke.

The Fed chief said it would have been a bad idea for Bank of America to invoke the deal's escape clause, because it would have led to extended and costly litigation with Merrill Lynch. That would have "greatly reduced or destroyed" the value of the investment bank, he said.

Earlier this month, Lewis testified that his job had been threatened after he expressed second thoughts about the deal. Lewis said the Treasury secretary at the time, Henry Paulson, and federal regulators made clear that if Bank of America Corp. of Charlotte, N.C., reneged on its promise, he and the bank's board members would be fired.

Bernanke also denied that he or any other Fed official urged Bank of America to keep quiet about Merrill Lynch's financial problems. Failing to divulge what he knew about Merrill's troubles would violate Lewis' fiduciary duty to Bank of America's shareholders.

But the committee's ranking member, Darrell Issa, R-Calif., accused the Fed of having "deliberately kept other regulators in the dark regarding the negotiations with Bank of America."

But Democrats, including Rep. Dennis Kucinich of Ohio, said the investigation revealed that Fed officials thought Bank of America failed to properly review Merrill Lynch's finances.

Bank of America ultimately received $45 billion from the government's financial bailout program, $20 billion of which was linked to its acquisition of New York-based Merrill Lynch.

Bernanke defended the deal and bailout, saying the action was needed to avoid another blow to the financial system, which was in distress.

THURSDAY: "I never made this threat," Fed Chairman Ben Bernanke said when asked if Ken Lewis' job was at risk if he blocked the Merrill Lynch deal.

JUNE 11: Bank of America CEO Ken Lewis testified that his job was in jeopardy if he didn't go along with Bernanke and other officials on the Merrill merger.